Originally Posted by
fabs
One piece of the jigsaw puzzle is missing to complete the deflation landscape across the West: a slide in oil prices. This is becoming more likely each month.
Turmoil across the Middle East and parts of Africa has choked supply over the past two years, keeping Brent crude near $110 a barrel despite a broader commodity slump. Cotton and corn prices have halved, as has the UBS index of industrial metals. Such anomalies rarely last.
"We estimate that crude oil is now the mostly richly priced commodity in the world," says Deutsche Bank in a fresh report.
Michael Lewis, the bank's commodity strategist, said markets face an "new oil supply glut" as three forces combine. US shale will add 1m barrels a day (b/d) to global supply for the third year running; Libya will crank up shipments after a near collapse in 2013; and Iran will come out of hibernation. "This will push OPEC spare capacity to levels last seen in the depths of the financial crisis in 2009," he said.
America is on track to overtake Saudi Arabia as the top global producer of oil by 2016. It will account for more than half of non-OPEC world supply this year. The US Energy Department says US oil imports will drop to 5.5m b/d by next year, half the level a decade ago. This turns the world's 89m b/d market upside-down.